Using Networks to Facilitate Effective Consumption

The Altruist Economic Network: Leveraging Consumer Power to Better Our World

Yesterday, a thought crossed my mind regarding how to generate funds to support Effective Charities. Being an attorney in a small firm, I am able to command a portion of fees generated from business that I bring in. As this portion of the fee is mine, I can elect to put directly into Effective Charities, such as those recommended by Givewell.org, but also, to charities that are shown to be the most effective in other areas that short-term human welfare, such as animal welfare, long-term projects by which funding may have a considerable effect on changing the trajectory of the world for the better, or helping to avoid catastrophic futures. I realized that this willingness of myself to connect the provision of my services for a fee with the funding of projects aligned with Effective Altruism allows for a compelling variation of a product that may find analogous applications in the vast majority of goods and services domains in which Effective Altruists purchase just about anything.

One way in which Effective Altruists can currently advance Effective Charities is by accumulating wealth through the sale of their labor or other business activity and commitment of a portion of the income generated to Effective Charities. However, Effective Altruist may also generate funds for Effective Charities by rationally directing their purchase of goods and services. An Effective Altruist could do so by channeling her consumption of goods and services through other Effective Altruists who have committed to directing the profits they derive from their businesses to supporting Effective Charities. Rational transactions typically create a surplus of value for both the buyer and seller (or else the transaction would not occur), consumer and producer. The consumer surplus is the difference between what the maximum amount that a consumer would be willing to pay for a good or service; the producer surplus is the difference between the costs of the production of a good or service and the price actually charged by the producer. For instance, if a consumer is at McDonald’s and is really craving a Big Mac, such that they would be willing to pay as much as $5 for the sandwich, but it only costs $3, there is a consumer surplus of $2. If it cost McDonald’s only $1 to produce its Big Mac, but it charges $3, there is likewise a $2 producer surplus.

My proposal regards this producer, or seller, surplus, and how, through effective networking, Effective Altruists can leverage their purchases of goods and services to generate funds for Effective Charities. This is because Effective Altruists, as consumers, can potentially control the persons or entities who capture the producer surpluses of the transactions in which they participate. As is, if one has no regard for the person or entity from whom one purchases goods and services, one has no control over how such surplus is allocated. Consequently, such surplus could end up going toward the producer’s personal consumption (buying a yacht, getting a larger TV, etc.), the furthering of ineffective charities, or anything else. However, if Effective Altruists consciously direct their purchases toward producers who had committed to direct their profits toward Effective Charities, they could generate thousands of dollars individually, or millions, or even billions (conceivably trillions, as I will discuss below) of dollars collectively, through their purchases whose producer surpluses would have otherwise been inefficiently utilized.

One context that comes to mind that generates significant producer surpluses is the sale of life insurance. A life insurance salesperson often collects a commission that is some percentage of the buyer’s life insurance annualized premiums. Thus, if a life insurance salesman generates a lot of business, they can extract tremendous profits. Through the sale of hundreds of policies on an annual basis, such a salesman can earn hundreds of thousands of dollars from the millions of dollars in annualized premiums that she generates. Now, imagine that the Effective Altruist Community knew of a life insurance salesperson who would limit her income to $40k a year, all profit in excess going toward an Effective Charity. The Effective Altruist Community could direct all its purchases of life insurance (which ostensibly, some would want to purchase to protect their families from risk), through this Effective Altruist Agent, thus diverting potentially millions of dollars that would otherwise have resulted in inefficient use. And, of course, this is applicable toward virtually every consumer domain. Millions, billions, trillions of dollars in profits are generated by car dealerships, law firms, stores, restaurants, and countless other realms of economic life.

Effective Altruists can, first, establish individuals and companies in various spheres of work and business who are committed (contractually, ideally) to devoting the profits generated from their business and labor to various Effective Charities. Then, Effective Altruists can form a huge collection of networks in geographic regions all throughout the world and direct their purchases through persons and organizations who are contractually committed to putting all but a small portion of the profits generated toward Effective Charities. This might be called the Altruist Economic Network (AEN). Are you buying a new car? Buy through a dealer through the AEN. Are you purchasing a TV? Buy from an AEN electronics store. Were you injured in an automobile accident and need a lawyer to sue and maximize compensation from your injury? Retain an AEN lawyer. Effective Altruists worldwide generate millions or even billions in producer surpluses from their consumption activity. The AEN would be a way for Effective Altruists to make the world a better place not just by dedicating a portion of the wealth they generate to Effective Charities, but also by leveraging their consumption and other economic activity to create a more just and happier world.

Furthermore, it may well be that consumption through the AEN might be able to achieve broader subscription than Earning to Give. This is because dedicating a substantial portion of one’s income to supporting Effective Charities generally involves a degree of sacrifice (or at least perceived sacrifice) of one’s well-being and/or the well-being of one’s family or others whom the Effective Altruist has a direct emotional connection or feelings of loyalty. Thus, it is difficult for many people to devote 10% of their income towards effective charities. On the other hand, directing one’s personal consumption and purchase through the AEN would not necessarily represent any loss to the consumer. The sacrifice would be borne by Effective Altruist producers of various kinds, who commit to limiting their personal gains (in at least one sphere), so that they can be vessel carrying the seeds of our economy to the most fertile fields in the gardens of well-being throughout time and space.

One can imagine having an AEN brand that is endorsed not only by philosophers such as Peter Singer, but by celebrities worldwide. Indeed, if having the AEN brand was not sufficient for AEN companies and individuals to outcompete traditional companies and individuals, it may even make sense for Effective Altruists to subsidize or otherwise provide an external competitive edge to AEN companies and individuals, facilitating the capture of significant market share in virtually every economic sphere all over the world.

The significant barrier to growth to intrinsic to Earning to Give, that it is difficult to persuade individuals to sacrifice significant portions of their income to helping charitable causes, does not necessarily exist regarding Effective Consumption through the AEN. This is because only a small fraction of the population would be required to be Altruist Producers in order that a majority of the population could direct their consumption through them, without any personal sacrifice resultant from the transaction on the consumer side (indeed, conceivably external subsidization by the AE community could tilt the economic field even further and cause an AEN producer to be even more attractive to an amoral consumer than a traditional competitor). There does not appear to be any reason that the AEN could not occupy a significant portion of worldwide economic activity, and thus yield funding for effective charities in figures that might revolutionize what Effective Altruists could achieve.